Friday, March 18, 2005

A-level economics lesson

I have great respect for the National Audit Office (NAO), their reports are usually very thorough and well researched. If anything, it is often a shame that they are not more involved in the decision making process earlier as I am sure that their good counsel would save the taxpayer many millions of pounds that could be better spent elsewhere. Imagine my surprise when reading the NAO conclusions of the newly deregulated Directory enquiries service that could have been written by any A-level economics student.

"Residential consumers are paying more for directory enquiry services than under 192" and "Consumers are using directory enquiry services less frequently than they did prior to deregulation". That is what happens as you move along a demand curve.

"Consumers are confused by the array of numbers on offer and as a result use directory services with the most memorable numbers, which may not always offer the best prices." I cannot think of any consumer market where this would not apply.

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